The efficient contract model predicts unions will contract for added employment, that is, a level of employment higher than would be predicted by the demand curve for labor. Using three data sets (on Canadian industries in 1971–81, U.S. industries in 1972, and U.S. construction projects in 1973–74) and several estimation techniques, the author estimates and compares labor demand equations for both union and nonunion firms. Some regressions that control for few variables support the added-employment hypothesis, but those with more complete specifications reject it.
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